The Latest Spanish Property News from Kyero.com
July 23rd, 2007
A new computer programme will allow the tax authorities to know instantly about the sale of a house, and whether the declared price is fictitious.
Big Brother is lending a helping hand to the tax inspector. In the near future, the tax authorities will know immediately of the sale of any house anywhere in Spain. A new computer programme has been developed, whose function is to link the computers of the Tax Agency with those of public notaries and property registry offices throughout the country, and it will be operative later this year. The new technology will also help the authorities to discover if the the declared sale price of a property is its real value, based on average property prices in different areas.
The aim of the new programme is to help in the fight against tax fraud in relation to the purchase and sale of property, which, according to some experts, accounts for a fifth of the entire underground economy of this country. Other measures are also being introduced, including an increase in the number of personnel working in this area: 40 per cent of the entire taxation work force, between inspectors, assistant inspectors and others will be directly involved in the property tax area this year, amounting to a work force of 2,000, which is 500 more than last year. In 2006, a total of 46,402 inspections were carried out among 6,516 taxpayers, which was 90 per cent more than in 2005.
Rental fraud
The director general of the Tax Agency, Luis Pedroche, confirmed last week that the number of inspections would increase. Speaking in Santander, he said that there would be greater co-operation with other state administrations, that the aim of the new measures was to tighten control over money earned from property rental and sale, and ensure that declared earnings conformed to the reality of the property market in Spain
Almost a million properties for rent are not declared to the tax authorities, which means that six of every ten such transactions are kept secret. The Tax Agency puts the figure of 1,818 million euros on the amount of money lost to the state by this form of fraud each year.
Declaring a house will now cost more
Buying and selling property in Spain became more expensive for taxpayers last January, when the government decided to increase capital gains tax on property. The small print of the new tax reform includes a technical modification, we are told, which allows the tax authorities to consider the purchase or sale of a property to be an ‘economic activity’.
In the past, for a property transaction to be considered an economic activity, it was necessary for the property in question to be a commercial premises, or to employ at least one person. This distinction has now been eliminated, and each case will be examined individually to see if the taxpayer was acting as a private individual or as a property speculator.
